Euro slide spurs EU wheat to weekly gain

Paris wheat futures extended gains on Friday to end the week higher, as a falling euro improved export prospects for top European Union producer France, which has been struggling to shift a record harvest. December milling wheat on the Euronext futures market settled 1.25 euros or 0.7 percent higher at 179.00 euros a tonne, leaving it up 1.6 percent over the week.

The contract earlier set a one-week high for a second straight session when it peaked at 179.25 euros. The euro continued a slide to touch a two-month low against the dollar, in the aftermath of the European Central Bank’s signal on Thursday that it could use further monetary easing to counter weak growth and low inflation. A weaker euro makes grain denominated in the currency cheaper in dollar-priced export markets. “The euro’s fall has put French wheat back into contention for export and almost at parity with Black Sea prices,” a cash broker said, pointing to fresh export demand that led to a strengthening of physical premiums at French ports.

“But that doesn’t change the fact that time is short, because with a 41 million tonne crop there is no room for delays if we want to avoid logistical bottlenecks later in the season,” he added. The euro’s drop against the dollar allowed Paris prices to diverge from Chicago futures, which eased under pressure from the dollar’s rally. The favourable euro trend also took attention away from a modest volume of 277,000 tonnes of EU soft wheat export licences this week.

Traders were awaiting the outcome of an unusually large tender by Ethiopia in which the east African country was seeking to buy 1 million tonnes of wheat, with bids due on Friday. The market was also monitoring rain forecasts in Russia and Ukraine, to see if showers could revive a sowing campaign hurt by drought.